DLR - Earnings call transcript Q3 2018 | Digital Realty Trust, Inc.

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Operator

Good day and welcome to Digital Realty's third quarter 2018 earnings conference call. All participants will be in listen-only mode. Due to scheduling constraints, this call will be concluded after 60 minutes. Please note this event is being recorded. At this time, I would like to turn the conference over to John Stewart, Senior Vice President of Investor Relations. sir. ahead, go Please

John J. Stewart

be The assumptions. and today's Technology CFO also guidance and Sharp Andrea. make Management CEO statements forward-looking Officer will Bill is including will call the Stein Andy the on for speakers you, Q&A. call may underlying on and be Chris available Thank Power. Chief

could results to differ Forward-looking statements that expectations actual on involve risks cause are based and uncertainties that materially.

the and SEC. risks related call to business, subsequent For filings financial further XX-K with in the non-GAAP net discussion of contain to supplemental a to package on available income This our and included see will our Reconciliations furnished our information. SEC website. the are

of the Before third Bill to our I'd the quarter call results. CEO, tops our waves over I on like turn Stein, the to hit

followed up another backlog our quarter bookings highest in record reached second our our the with First, prior and high watermark. we

Next, Latin into America. we our announced entry

refinancing $X.XX growth for XX-year track our by further at on the issuance the call and of debt year X.XX% Bill. full with strengthened With weighted $XXX billion least, million and consensus like maturity remain average of beat credit we time third the Last the $X.X AFFO to turn we in four but by in a the not of the sheet facilities. I'd our paper that, over to a Third, years. we extending past double-digit per balance deliver to share

A. William Stein

thank you our third afternoon for strategic Thanks, productive against quarter had and John. execution very us. consistent Good all joining We with a plan.

with our for quarter X entry presentation. to acquire billion. was of Ascenty announcement of a page highlight agreement our the to turn of definitive Let's into Latin America $X.X the The

the data a a largest team providers, of market market. as center cloud and share. partner leading best-in-class it choice result, network fiber rapidly the the it management growing have the for global in made is leading Ascenty and proprietary It's platform has

and XX% was of XXX another data eight September planned portfolio under of in-service, six data as purpose-built, of is currently centers approximately construction, totaling leased world-class centers in-service megawatts portfolio comprised XX. Ascenty's The capacity.

data and pre-leased. the under October two the X.X bringing revenue has Ascenty generating fiber leasing centers providers, While leading were our global megawatts. approximately in approximately continued another to year-to-date Since to management additional to their megawatts leasing cloud announcement, construction execute team XX XX% tally

its high XXX base chip logos, blue hyperscale Ascenty the global portfolio, a leading serves of Given quality including cloud providers. customer

account In fact, for clients investment grade revenue. or of equivalent XX% over

than contractual a foreign appreciated the denominated since rent here in In XX% substantially that add addition month ago. Digital establishes Latin Ascenty's mitigating the might Realty currency as exposure. cash immediately real I This a just of leading over we is more center U.S. has America. acquisition transaction announced dollars data provider in XX% by

believe Brazil in can and our the market approximately market share further competitors. platform. its enjoys global total XX% market We share success, company's accelerate Ascenty by we expand outstripping digital far realties leveraging capture addressable additional

in also inquiring Brazil announcement the of a than in access. population received presents late we've September. significant of a calls in about customers fact transaction capacity potential data from our existing In The since inbound in growth it's center eighth currently has internet most market. the fifth the economy and less country, key the Brazil but XX% populous largest has emerging world number

in significant see providers local their to customers presence enterprise Latin As consumers, we America, opportunities begin this to this ride wave of online as expand continues global relatively young to market and growth. service and next come IT

local of sets to partners Finally and we've strong record structured two benefit from with track expertise a the of execution. market transaction

equity million Ascenty. across of the infrastructure, in to partnership market has country a management. equity. investors is Brookfield, invest and XX% real investments well-established a rollout of resources now initially Brookfield Brazil, interest We Brookfield over track joint to committed are ultimately strategy. global pleased within asset one to provides in venture private a expected estate with unparalleled of to for help in be partnering years, leading Brazil the power, grow $XXX a assets with and renewable record and exchange with the Brookfield experience investing under for been with and in The in over access, largest XXX has own $XX billion us manager our

XXXX, Digital joint CEO, our financed. In addition forward the common addition is XXXX. Ascenty's to venture the the to in management and raised as the fund company. our up substantial also Torto well equity with in Ascenty Brookfield units Management that transaction We from day majority practice, to debt we is management. same Brookfield. equity the the with structure, This lockup its transaction as financing. a announced We've historical subject lined with to dilutive due dilutive a the consistent rolling capital prudently X% in contribution stake the is three in contributions team be non-recourse expected into Chris X% the and approximately Partly conservative led Realty to by equity acquisition, OP of year staying X% is equity

growth longer management a pending However, see with is run announced significant time to market opportunities around with Ascenty of assets XXX by crack tough Realty's world same a accretive securing global $XXX of is At such or The our strategic. objective Royal purchase growth we least, acquisition it verified of growth million is favorably compelling acres and the X. to capacity assessing Dulles a over along our the next map customer in the announced global our Digital of network of we Blue the little $XXX,XXX spend we team, data sheet and less demand. and in precious be comps balance we in ability per how highly most important International demonstrating here We lot with to customers notch for time page market that compares supply per few trajectory. is bottom our our Airport our also very critical markets than to the the long-term cost million the a land at expect top profile. the further have comprised of a acquisition heritage basis real to The world. all estate Last acre This with in on to $X parcel fiber and not scale, chain portfolio highlighted the acre. accretive of consistent recent term center over the a but stated support land significantly enhanced great Ascenty,

and market ground, Let's active of world metro our the on we day. outstrip a and by Northern across demand XX% core traffic along form, through dynamics is and each passes deployments X,XXX the XX closing, also in the to providers differentiated Northern crews own and page will and remain multiple support megawatts Construction XXX primary demand recent and state-of-the-art continuing that with across and supply of Virginia new acres on providers similarly Virginia, demand pick Dublin. America, remain the in build over region world's continue flexibility largest has over in track most along in which competitors market that cloud strategic are own current of with most Global the the of supply. excellence. In North landholdings across the markets. Upon vacancy Europe, which particularly number see the X. including over this Pricing up the land healthy. is also turn in of capacity have active options out currently Digital XXX metros of competitive and metros. for data the we we check to pre-leased. solutions and focused connectivity in in center XX% drive operational to of to Enterprise robust demand existing come Despite Market European expansion fundamentals on cloud concentration begun megawatts are capacity. remains future Realty's shovels purchase, Internet megawatts largest will construction portfolio is London customers to major far and under record

footprint remains are with of offerings pan-regional selection partnerships to number bringing and along robust or it vendor pockets the frameworks, check, customers and and regulatory Across data of limit popping customers competitors core market met key their steady either demand up their markets of we and healthy new for in the On current to space, for interconnection demand the in looking pools in of differentiator markets. particularly local balance, demand the complexity demand supply of serve competitors. center believe from for growth. comprehensive phase region, remains largely is new expanding existing even as a Asia-Pacific global Supply new being power language next While provider. their with platform by our barriers view

environment economic macro the expansion intact. Global remains page turn Let's X. to on

a of growth. war risk have broad-based economic potential disrupt to are Although, does of the we mindful the trade which global current the

are faster than levered to growth volatility. growing a in to global demand economic be both insulated GDP fortunate and from We operating somewhat business drivers secular

Given in the growth store. like flow environment over take we our in of earnings, results. and I'd dividends cash through our turn continue per to share balance you call well-positioned sheet, to Andy macro hold the our believe the are we business to deliver resiliency to industry, With financial steady and whatever to our may that,

Andrew Power

Bill. Thank you,

We values segments. provide Let's with underscores and trust. very X. The had We they customers product balanced choose them customers' leasing reasons. customer offer quarter on can digital page a our across the trusted begin in demand regions, foundation, Digital our with many ambitions. strong see for performance us activity the Customers Realty. here We types resiliency powering continued

including data those We have energy. reliable by solutions, secure, compliant renewable center and powered

scale And data operational, risk. customers range strategic, when their of Our our hubs centers manage solutions help customers offers a global hyperconnected our them. and need interconnected of reputational and and footprint solutions financial, where finally, broad

million $XX million a During The a prior contribution in the quarter, an full contribution $XX the $X of our year-to-date second ever, average total was for on space likewise interconnection colocation all-time million and and the combined colocation The new with compared million, $XXX million $XXX to $XX including interconnection. contribution. best on total including $XX we total in leases signed of bringing power million signed our term the quarter, XX million second record. quarter high million, number was heels We highest years, bookings XXXX. year totaling close our the to $XX from third lease for bookings weighted of

most Service cloud service top our different our our with cloud and provisioning the reported, and stated our also requests strategy a services." bandwidth company We the and destination to a AI traction As these using include overwhelming painless world. customers. Salesforce, testimonials with after to them provider, bandwidth quote, valuable "We with XX%, suggest, architecture destinations much platform, Exchange continued times by sought Realty enterprise many efficient the voice Digital simple, "Having expansion virtual enterprise are ecosystems traction partnership of lowers our of who hybrid the the Exchange to provides environments Service solutions XX due provider, up partly to now majority testimonials solid have global only customers. from Service and for setting to of I is is around of Exchange the And While the the cost powered This largest their Recent accelerate unique customer SaaS not access Megaport. our seeing include most secure by easier." multi-cloud it key makes

future ability demand third expand. the due the land that customers attention cloud to throughout win megawatt provider and and to our This a current detail sophisticated meet highly their the the with was XX-plus to hyperscale quarter, our framework, repeatable provide to our to global ability ability accommodate contractual transaction efficiently a is During hyperscale, pursuit, to us selected growth. and largest

we majority the logos during added new of the existing XX our quarter. was customers, business While with new

In of addition, sales our we alliance customers through our added user engagement, ecosystem. new eight partners' end partner to our

leveraging their segment investment notably Our deployments five included this a for network. density be to used wins upgrade contribution that global that's quarter. Digital current Reality's a global Enterprise will Key new network colocation delivered strong bank wide-area

Digital chose dual interconnection backbone a New expansion colocation stock provider; for analyze, and for for leading media wins Data world's a an redundant meet-me-room Francisco digital Dallas Within York a third in distribute backbone A used leader and services and L.A. deployments New areas to San of communications for in will oceanography to environment deployment. data be our of providing the quarter with provider streaming in store, oldest and their highly time. platform to national metro exchanges We open leading and edge included: delivery, services. Ashburn Realty not-for-profit connectivity be its that in and Network segment, in will real and Center a businesses; new foundation balancing, load content one key expansion video York Atlanta

X, $XXX The bit but between five leases all-time commencements current backlog and yet to quarter of weighted of months, third page reached signed the average. was high the Turning another lag commenced not on signings long-term our backlog average a below million.

roll Moving Park was activity signed. leasing we The on term the out down. to on across million mark-to-market X, have And addition XXXX. then with quarter, we largely $XX in when customer quarter any a management. we when reflected properties long-term in to We spreads releasing of in on result, what Village of footprint enterprise still Chicago. third during in activity are in Grove sizable a while push to prime Park year new campus, previously. a our in signed we renewals customer above-market the lease renewal campus also was to including our about leases we renewal weighted the Franklin page up mix these due negative believe new Franklin average as red. renewals simultaneously releasing portfolio. presence driven the holistic multiple within business a our a to on relationship by we've single slightly advantage elsewhere existing establishing their we releasing renewals. and particular was expect cash are supporting of as not leases presence the transaction This X.X%, the whenever into new a former X.X cash connected can, Chicago spreads renewals. on is and to customer legacy of Realty talk our given distinct within new one power-based who and And spreads for renewals their do global Turnkey renewal we competing cash quarter were This We business package try approach a transaction negative in already we years, example leases Digital on provide our our and colocation could slightly well financial mean during Elk comprehensive third is the expanding called full for as guidance locations This rolled rents in building healthy renewed both cash a for offerings, and DFT

In third positive and terms of XX due absorption in performance, basis London, ticked Chicago, primarily to overall portfolio points up Dallas. operating occupancy quarter to XX.X%,

the by the quarter risk days, on Turning We to a dollar XX currency represented to point XX basis strategies locally natural act in U.S. as year-over-year roughly over economic and mitigation hedge. results. XX, page strengthened headwind past denominated debt risk growth somewhat issuing to FX a the third our manage

our from given a to economic only within risk currency region net are perspective. assets an So exposed

rate debt exposure, managing risk fixed to rate terming interest by proactively with longer-term foreign addition short-term currency In also we variable rate out financing. mitigate

FFO Given point to duration full-year our long-term the basis long-lived impact less share. per our with than strategy of a XXX matching a assets rate move of LIBOR would have debt, in X% fixed

is Our near-term funding well-managed. very and refinancing risk

X% earnings and a of consensus. $X.XX share in FFO per up came terms growth, was year-over-year core above In

you may are closed we the except share release, are substantially seen sales XXXX core per the guidance. have press the Most FFO in we that plan. As contemplated our asset reiterating drivers unchanged now have of all from

have later acquisitions revisit expected to may market development this year. the and bond reflect We we spend the land raised recent our

no which would there will earnings, our XXXX will previously and recognize for the the cost primary that to perspective, have be corporate P&L perspective, neighborhood this to balance impact centers be had million have the right be costs accretive to the begin the the a now is expensed is lease the will reported January a capitalized subject a somewhere use on development At year. we earnings actually accounting accounting compensation on roll indirect longer gross development a tenant, the operate the required forward. be to office leasing next we to through standard $XXX If your keep we on it liability the sheet impact end data Realty $XXX to do for of $X.XX, a all $X.XX on to estimates. that new our that estimate sheet. cash lessor economics give is changes the accounting we of going to not lease flows. dilutive primary Realty let's The sheet where an forward update in share estate. XX. page run million. be year, such project models to and January Digital turn leasehold, that and you going lowered adopted X were underlying expect real accounting projects capitalized adopt forward. these substantially per and by is day, balance as impact And of the irony our asset on we certainly lessee lease to those we own outsized on begin you the not please FFO our a the core mind XXXX will We our situations our balance they'll least, in but impact will no frame that X is Digital you us returns up Last is in good As space to corresponding to From expect on to as standard accounting our to given should of expect change From of we XXXX, while to or new of the the this basis where since baseline landlord,

needs, cost. a options, capital August, XX-year the has early development joint originated forward at Over secured on secured In the the proceeds raised strategy we In fund offering five-year consistently million financing we September, September, net for equity property Ascenty and in of related digital team menu to months, at mid-June, approximately venture loan to we CMBS $XXX CapEx and coupon. our X.XX% million while maximizing several X.X% with $XX late Real originated CMBS minimizing executed sale Prudential mortgage agreements. forward in-house a available venture the a late when In and our receive acquisition past joint the settle of loan executed Investors. team of billion expect the a million bonds mortgage Seattle; $XXX in our U.S. Estate XX-year $X.X dollar our of we X.X% for we at

capital revolving million. our completed platform, credit raised early we their from manager. global our opportunistically a denominated finally us announced our Brookfield, for we full success sets asset also reflection a of The past yen Japanese to billion pricing $XXX financing menu able our growth. the well capital, to access private line prudently sterling leading with is activities enables as in and earlier the over months of refinancing afternoon which at this million provides of the to for the us peers, to tighten these were thank of public bank credit as facilities. of We best-in-class group collective million $XXX and senior of commitment joint apart well global paper In by like the market the global $XXX fund from accessed The Corporation. facilities oversubscribed and years $X.X fund a coupon. million several also a our points, XX global were XX-year venture facility And a credit In Mitsubishi X.XX% the our private entire five-year roughly In would the October, we process, by raising upsize bond to unsecured $XXX credit basis extend three availability by we we date maturity process, the support.

we consistent the bond As our I our assets. market eye Euro right towards duration later strategy financings the across managing support with that actively may this of revisit sheet, year ago, with side longer currencies our of balance the an a mentioned moment

of end line extended XX, and our weighted remained to the the remained X.X at healthy see outside XX% weighted debt at for of on and is environment guard maturity in can U.S. natural of against X.X%. you a recent the X.X of our forma times. six Over is investments capital average providing years, financings EBITDA As the as Net fixed FX third rate our debt non-U.S. the for Roughly and times denominated average our fixed our flexibility debt quarter is the have rising our from of to schedule rate debt hedge to as unsecured, a recycling. is coverage greatest nearly dollar page maturity acting XX% coupon XXX% charge pro debt

as Finally, debt have maturities from left too nominal and side see near-term we with XX, the clear runway years. can in page no a tall bar of out the you

positioned concludes and to customers our a This Our balance Q&A your to please but storm, sheet weather prepared consistent begin opportunities take would strategy. for will growth the fuel our the now, questions. also to with pleased is our globe, we be Andrea, long-term poised around financing remarks you session?

Operator

My pleasure, Mr. Power.

We question-and-answer the will session. now begin

Please The first question Lynch. of Merrill ahead. Michael comes Bank America Funk of from go

Michael J. Funk

Yeah. tonight. for One Thank the one you begin. to taking question quick

some was Northern from is negative today impact commentary on the there in that on Virginia having and the pricing yields. perspective project earlier pricing trends that So,

perspective marketplace? hoping that that dominant as market, the that So maybe in your operator that and seeing you're add a returns expected in you

A. William Stein

mind, quarters. a parts lot hear we I world in something two And absorption that competitors demand includes over but in we've our experience is rents our absorption not just is times going in the Northern last more speak some flat. earning, Virginia plus the that quarters the each returns Thanks, that have for the but megawatt Look been are to Europe, the mean in Michael. in about done particularly than deals XX the I'm to of other couple of that last keep year-to-date combined. Europe rest two of

acquired our do the DuPont currently both our I and needs the in But global our absolutely It's a as campuses new building to of differentiated the can is Dulles think continue land view Virginia customers for we their forward part and provide product the we our opportunities really and the base. Northern the legacy and campus around we our on of look both and scale matters. our is I DNA our of ability chain our mean piece expand Digital customer real to So support to critical. ability And just offering, world. satisfy that critical of reflection to going we're heritage, land supply a estate out clear and campus that

I So, mean, very and bottom dynamics Virginia achieve But a line adjusted us returns. attractive the is Northern market believe current we to strengths is risk the market. enable play our to competitive

Michael J. Funk

just with what larger for I'm I one you've through of maintained the rates still the going guidance to follow DFT more full quick fourth about thinking year rental one. I deals, legacy larger pressure to least from those in maybe those renewals quarter, the seen quarter of but commentary it you one the heard slight and on expecting visibility on for cycling know, some and the about a at we've your year-to-date kind fourth put to the behind you is seems and that renewals do imply read? of that DFT? the have And there, you're deals what correct

Andrew Power

when that on finish has necessarily our is table. GAAP and Thank few think few hence particular ones gets guidance to – and Andy. hence bit I'd a don't is quarter get larger of fourth in the quarters of we've done or It's you, several a cautious this tricky cadence. the X.X% any of on obviously view because some little customers timing the of I on a renewal with may which renewals a march our customers been the positive larger say year-to-date close of think we up years, to our I Based quarter – cash to handful advanced that coming a same in that is the to have and listen, dialogue the estimation on have basis, we had more map next say, to mark-to-market, done would always line I full-year negative over Michael. so slightly X.X% our basis the the

Operator

Please question KeyBanc go Markets. Jordan Capital next of Our ahead. Sadler from is

Jordan Sadler

afternoon. Good Thanks.

not base reflecting as bit appear on just to obviously equity your the to touch very little it a doesn't something it stock disconnect, fundamentals, want price. least you or centers a fully robust. this relates much year success be markets I So of had data at The in leasing, of to have guys so

curious allocation how given do capital like model environment yours? a interest business the So, for capital the tweak rate I'm you intense model rising

A. William Stein

So, things. Jordan, think couple there a I are of

in we to the We've work build drive all, your bigger continue can building you to basically, lower down more that. drive quite build, unit But our costs. been can with successful First the the the per of it's you And That's megawatts. costs. leased, which a is example XXX year. for almost up you are building megawatts, know XX is it's Virginia, out than in And basically and that Northern built less it leased. we've

drive allows clearly unit it cost so And down. your you to

bought costs I'd say Dulles and next with at on line. our that and significant you pricing. it that than there's our some The half if particularly you of plenty and your of buy where liquidity to announced fix our reduced you of similarly keep estate contracts rates related you we with bulk. land XX-year sure of both say And I'd Because in it's initiative, balance part the price us of the a cost the which other final And there in know, did rate somewhat sheet and management function in I'd is inflationary Airport over – have basic in environment helps able equipment acres how say fixed vendors your land and just make market to refinancing deal, too and booking sterling of in our we're extend debt. fundamentals per three-year just through pressure, to XXX deals acre. a vendor power We terms which – relates of upsize it's and less we it as the we real piece scale lock just you our rising to and this revolver,

guess, I we as advantages. what So intensifies competitive continue say competition it's our is exploit I'd important that to

Jordan Sadler

That's fair.

the need in and Virginia follow-up land as the to in a you land quarter else see backfill the in here in terms you incremental mentioned significant way? of inventory anywhere took a you Just Northern down where

A. William Stein

absolutely. Yeah, no,

So, in as announced adding couple in markets I a release; we're think, earnings looking Asia, to where Sydney and we're as other land. be Europe this going well at we of

I think we're in the pretty good U.S. in shape

Operator

Our ahead. next Markets. Capital RBC question of Jonathan from is Atkin Please

Jonathan Atkin

thank you. Yeah, Thanks.

on So couple questions of international.

Brazil, in opportunity in deployments bit the are, a and those So modest seemed sizes of essentially they given position market. size the the that leadership of

other and so Mexico thoughts if about wondering the Japan you that do the then that Thank I'm strategy. U.S.? around And where region, the things you. directionally in any and in you your into Europe updated us on then finally, in fit just there? (XX:XX) as curious and get deal assets could larger venture when sizes update Brazil And on Australia, how have they and I'm anticipate and might joint And stand might there elsewhere

Andrew Power

the Hey, the tackle think, and first he of, three in it he this I and to it if Bill, second – is Jon, to likes. Andy. I'll me can here, I'll me, toss excuse I'll toss tackle back

has your deal to than cloud, signed, and buying the, signed, signed a down last that's speaks their XX So an which service a the for announced of megawatts customers, months. record with call cloud providers say less global track – these an it, incremental top Ascenty bit sizing, are Ascenty the or we in the point shouldn't different sizes, first consistent certainly two team bring we that X.X a we X.X on the megawatts since to we mentioned, as incremental transaction I turn

been back, dialogue North very for I stages with their going in customer the profiles think for matter, America much fact those of larger of similar or that aware those has Ascenty team comparable to growth certainly customers Asia, is on and that or several Europe in of we're years taking takes. the several here in that

migrations, similar grow. is size and they to will expect, our compute we on of cloud capacity landed the Ascenty and record and team So these that is has where hit track the in the customers land deal terms where initial ramp platform that quite expand. of nodes, sizes pleased We're typically

Atkin. quite Bill that. Maybe Mexico talk to over other hand we're and optimistic So on markets, to Jonathan it the I'll about

A. William Stein

very will Latin markets to in much be customer demand. driven Jon, relative in there to entry other response America,

We to imagine. will by with cloud enter them. are from might markets we the new top as customers, almost our driven all of hear And in we dialogue you what which be extent close

not markets. as relates very by to strategy key we're will they driven to orders, specific build if It and will come it new from be upon So embark much it customers. will, going a you

I next based think we'd that enter we're there what though, hearing. likelihood a down within on it's to one suffice XX at say new least market months the high there's

Andrew Power

into Mitsubishi on Jonathan, I And say Last Corporation asset. you in a is front. are very online a on strategic Tokyo Osaka. about cloud then also would we Japan. The venture also think asked joint provider had things with quarter well top an the lastly, service with going I coming update our win announced that capacity

I'd the to then And inquiry. list on new amount subsequent a locations end, seen top substantial customer of WAN continue announce procure where and win campus additional think looking a pretty of Tokyo and campus, have runway to provider quarter I be a have service back probably we'll new that to with to growth cloud we on of capacity. five we'll a long that add I

Jonathan Atkin

Thank you.

Operator

comes ahead. question next Synesael of Cowen Our Please go & Company. from Colby

Colby Synesael

if I may. thank two Great, you,

that is the Ascenty, on fourth off First expected close quarter. in to deal

as expansion, And going relates then into I statement? just to we landing How into get X% was on was that that just to market is to can be about the Ascenty's we talked our hoping, a should assume models Andy, dilution, that starts So into Chile. remind equity that you that which the potentially the including I last to thinking actually us how flow actual should question, forward income think raise, it deal. the piling about

referenced, the your that the XX I within interest market assume next Africa as months as such in markets others just forth. you to India I that that. that's Thank like wanted And wondering well what as but then also just So so just is and you. confirm

Andrew Power

Thanks, Colby.

guidance call, be it given of model guidance not XXXX to call components to And into that close late quarter closing on guidance with conjunction given out. for equity So obviously fund in is you're November-ish. the the quarter, on company the happy our fourth share earnings third give obviously when in We've portion probably yet timing out the of our XXXX you and comes full we're the standing just a we'll we'll offering that correct, venture. estimated

best rate. that X% financing chunk a the I I Realty debt secured then a you double of through risk that interest rate give think good an becoming interest can Digital the is ultimately XXXX, dilution about fact the to XXXX, that by in that accretive non-recourse dilution are due carries we mitigating

So Bill FFO, back back shares, of components, the a could international is amount and so I'll the forgoing the I toss you for to near-term thoughts numbers. this mitigating the of three the we have other strategy, these obviously using financing on some of bet it EBITDA be amount Maybe and markets. it of debt really and risk that into cost

A. William Stein

gather not So, you're down next Chile point looking Colby, entry on I for is there. whether the or confirmation

mind process enter through expect. that everything our currency the risk, of we it for have risk, end to economic go that we and board you market, we new a here in approval. rigorous keep day, the Just the a And when political goes very at at looking risk,

that is a opportunity. Again, just everything that. factors, we whether So act I our of with I to that's and or risk respect specific next includes which size comfortable market a assume because are we and next see don't really the market, our there market the not we know or ahead opportunity how to to history. associated of of one we enter board that factors Relative with the with the could can and and of to you're lot new Africa, after want in referring jump a function you that our

Operator

Simon Please of from question Flannery comes Morgan Our go Stanley. next ahead.

Simon Flannery

Bill, you or much. very just and Thanks. the about seeing what in talked Good inflationary pipeline today, economy? broader changes a any the Thanks last other how thanks. Can we're cost looks regions lot then quarter. of the given in Great, evening. in pipeline construction the pressures various the you us update

A. William Stein

he Sharp in be Andy pipeline. have to then given actually over opportunity here talk We we'll And Chris might speak, the construction, to able room, speak about the an and to who turn runs to to it design.

Simon Flannery

Thanks.

Andrew Power

Simon. Thanks,

a was and we up a basis, signings recap total interconnection we well in in and really also step company's best is the of quarter, in as which had market, broad-based with America, America a great robust the second see. fourth was colo, a which colo the on had few connectivity not it before Chicago on great itself up EMEA Dallas, I power quarter, had as to which just but demand We $XX global step and We wins history market included thing. maybe a and a to Europe, diverse, by bookings. get and in and So multi-market to regional platform. million leveraging Asia-Pacific, would only signings, Ashburn third say our North the key North dominant in

Digital some time out where market with Realty, to previously had last in footprints on the they've think year, Turning of back of we've new continuation and where the We to landed the build half success the trends locations. accounts. dialogue the their customers global year the we're see same a on of and on XXXX, seeing in past I quarter continue at same to similar active the the

call P&A new sector, logos, we smidge on enterprise through plus logos, we this channels. quarters, new and the prior prior another step some below from landed Within of just a whole new logos it past XX XX%-plus our quarter had peaks up network eight

the another piece? some newer some want you and do interconnect Chris, as network construction and actually the fiber new strong board well well demand, as our pickup vertical. network the over-the-top So of across as names the providers I some other think aligning by within network we're colo in quarter charting legacy enterprise driven some towards We're providers. to tackle

Chris Sharp

Andy. Absolutely, you, thank

of this jobs today. keeping to we of I'd been local competitors. or have also projects the teams and that we alluded the for of earlier cost something industry-leading real relatively construction timelines the Bill a in to great any larger by longer was But have Simon, a is that's a the walked supply Realty. it emphasize fact element that global construction through. able But same in relationship key the really any allowed with the the the definitely that chunks fact market lot us them same an estate for last and that than markets program, that something online heritage also period alleviate and been alluded emphasize a in the operated have had program some the and being is also the we the establish also doing with on we a is of maintain to being time, is and that fact VMI that's would in Digital that to has allude couple the building question spikes now kind a a VMI a time have that of chain So, part of have coming of I to longer of Bill able Digital lot for world company trying to around quarters. of delivery in way been our with construction I'm we've the that term heritage mishaps more to

deliver possible the very stringent kind meeting of So some phenomenal the and these customer to of and elements that to into our from a base opportunity coming a of our has most class. our provided that and smaller economical seeing base that's we're consistently us timelines offerings larger asset lot customer product

I in really market an would point any don't we today. So we've we is, spikes industry of leading price to to today short say the answer deliver and continue the see and lot the I variability a locked think

Simon Flannery

these quantifying sales per builds? cost price, Do you of private GAAP some equity your in way any of new your megawatt maybe versus the have

Chris Sharp

competitive coming inventory that a the getting power, seen in, the then have last even also think providers new sure into are out to of providers the coming supply we've and that the some the And timelines. you depends the and It go the it's contract extremely into they facility we've continue we very shells, the money place industry able to any piece with certain available chain, apples-to-apples achieve complex Making exists in to delivery we've delivery those resources been some tell is a time now. about why we've getting give realize pleased leading question. very infrastructure you – specifics, people with But I secure but to of why timelines that really allocated. you dynamic build are securing right. there many fall don't required hit And And right existing pitfalls the teams of you talent we with are and so on great of would just the PE you can't talked these couple a some had but some comparison, of hard there really a power but installs times really That's the the I giving their in lot the the just into is nature providers I it's and a I variabilities. that on money long-term would that appropriate and market would facilities resources today, I tell definitely for that against to stringent and of to fit simplistic becoming to know you, because that We market. full to builds. do that's those field scarce. hauls There on that's of market, the tell hard of you data model out. tell out And an the

Operator

Our ahead. next go comes Michael from Please Citi. of Bilerman question

Michael Jason Bilerman

Bilerman. was close, That it's Michael

know first Andy I want it. take question, to Bill if or So don't

transaction, you If you about it was. about talked Ascenty the how about think a lot strategic how

at a this on adds how much quantify you deals investors of potential that would standalone in should that how like think up within of about for the down bit the profile and there's that somewhat your that leased take was profile. long-term deal a growth deal also forward could and going be growth growth dilutive lot to it doing the going accelerate How You that you talked about XXXX know be growth the context, to little other end day current portfolio, but your a this think development XXXX, you has to basis? to given of perhaps

Andrew Power

can chime maybe thanks, and is This Bill Hey, I'll Andy. in. Chris start Michael. and off

market enter leading dominant we XX% somewhat unusual close what step think to in terms is found a I into here a where was market quite and unique to and share, a of competitor position, third next the size. market essentially opportunity plus a

the nodes offer ahead in compute to on growth. essentially network initial and landed of our critical capital customers' position to support for largest far have buyers incremental we dominant this and the ramps top what So deploy already

the Now close building about was that associated with it with where what's constructed. unique the was revenue that is of contractual a half project to being

Brookfield investments of So that as non-recourse unique there's of be need into debt which their aspect, a cost covers the contracts we in equity certainly double-digit only but that that to pursued partner other rate. And years the massive timelines region, I to we the not that approach commence. their by is financing that XXX and fact and these close debt mitigation went with also choosing need given piece to secured is projects the a experience touched delivered risk this upon in region earlier for

only chime that South outside line think but as career maybe that they to platform see X% essentially in out per my I mitigate is call I I our there's these platform. the out don't onto data other And order diluted positive would of it to see debt to option that in opportunities So, X%, have, the AFFO reality fairly there can our parts this a of to while risk. in one say the today grow or another call XXXX underwriting to America of in there share coupon seen and closer opportunities in I the team I've center attributed when our we earnings and core FFO in inside not say bit. like actively little in we that, lot there's on it's capacity hand dilutive really our there, it other in has like that building space but Brazil I'd heavier that's out up really a conservative land or also think Bill today. And going

A. William Stein

project, type – construction return this is growth of the Mike, giant this some growth development we a period. is multi-year over I in returns which with ways think unique. project expect

high while one we've talked returns was growth underwriting, XX%. about seen that in are projects, you two these EBITDA in unlevered on the know the know teens XX%, that year I've you So, about year the development

base, obviously accretive standalone that's off certainly on our low So to that's a but growth rates basis.

Michael Jason Bilerman

Right.

are secular have being just sectors XX% range, there's these about that's both seeing uninspiring. A estate is leases and the attracted supply are going of real is seeing and to industrial But and that up. centers goes overall getting, this that assets centers, and want that know to There's both being largely sectors the demand data lot think there in if of you to two lease for are capital there. you the of overall, when question the perspective, not for to demand demand estate both industrial from that development XX% the space. lot I guys themselves spreads minimal of of back a And, much you're the supply a a is some at a the spreads all. have real lot factor because lot and institutional is of data have step back spreads recognize rent taken Second in on. I And the lease what space, a trends, lot the legacy

as fundamental trends the you as not do industrial? within are of are the they So, centers think within sort why strong data

A. William Stein

rent not industrial can guess question. you versed nearly But my the is, good asset thing as same an maybe our on to ask ProLogis, – observation industrial view as Mike, they so in space at space I give on we're they my for neighbors growth and understanding their it's class heels chain, releasing supply and have of a the the growth some more now rental these ultimately fairly bit little and not did fairly time. reorganization of spreads. the on technology rate of have trends the And that attractive long a you

with X as aggressive decent. And X% surprising X% not industrial year, much XX They're that leases to won't year as not you, I leases long long seeing really what as it's long certainly called say had they're Our composite nothing, as not X.X% it's a mark-to-market. time. year-to-date agree for still it space cash been not, mark-to-market you're it's of been XX more look, bumps with around I has year, space, cash is is a

you're have example, contractually grew one same with take little a I we and time, leases. renewed utilize what mentioned, we're our And is, to negotiation like competitive X.X happy of a platform in-place the I a in the to that our both were than less class seeing we a time and megawatts one what's the little at less them to bit megawatt bit they to same our a grow different X also wants when think across at of to in or different mentioned a relative deal order at with that remarks, kind either cash aggressive some that where to mark-to-market, at Chicago the industrial of we happy posture in for also space of the rough the but currently location In prepared negative a tie-up total same a renewals think I campuses, a try cycle with advantages asset relative campus we customer is us. we our at our have growth locations. about and that customer to the leases

was of a it's the they attractive platform. for think away renewal for can of tell at looking But itself by it you So able was Digital, just negative. were fairly to I value where because look you proposition win-win, you the would enjoy kind an that come economically our benefits I attractive the and and customer

Operator

from Securities. of comes question next Please Our Robert go Gutman ahead. Guggenheim

Robert Gutman

pipeline. I'm taking the part focused my the question. Revisiting on more for pipeline, thanks hyperscale of the Hi, but

So, at trying that that I on are taking you've stable pause. had back wondering is seeing to to some and or really two aspect back large deals replenished a part the both of sort pipeline you with strong of quarters times, very it was or

say the eight in I'd scale, times like absorbed Northern the next a market half similar the XXX market on America. first Virginia probably in biggest megawatts Secondly, North question that broader

basis, a question think is broader continues the So Digital really pause, this take more you the not view. few next next on quarter or do quarters rational specific does same a the it pace a which or

Andrew Power

for Rob, the question. thanks Hey,

not the get hyperscale growing we're in there's with well. going you deals time, all providers rolling into globe larger. or we're pipeline, shapes markets we with in in five same – with So is continuation on arena be active that be in numerous profiles, service platform supporting to And but health and deals at in be quarters all other infrastructures, to going do of there's seeing, out sizes, what markets XX tell the customers I'm top when to definitely growth At these on the row customers quarter. we America, it North megawatt they're fourth hyperscale the and be think, based fantastic. I other think to customers plus as looking similar you a two can't one customers, the confident the in have I and the numerous in with tend around but their dialogues another their these only

megawatts megawatts I or think in in And believe, we've comments, we've Ashburn. – the non-contiguous four on the that bought, we largest Ashburn over fact was your to recently about capacity I we've or Ashburn quarters based land the XXX averaged obviously, so done last Turning of leasing so.

the think I continued in market. this of big growth believers we're

looking a going to – to not numbers, in base I market. have these Digital I our conversation customers tour we platform. who large very propositions think, know you're get And it's the takes record think But second, think we have got not and fourth coming for large for new it's growing any another When Ashburn what the Realty just the to third I Ashburn that coming customers and much like keep whole installed never who a value to because about customer an for quarter, are of back location. I and it based you you on conviction market. around us

anything lot a peers other competitive want those? advantages have do Chris, other market. the we think you I on either in of relative of add to to

Chris Sharp

Andy. Thanks, Absolutely.

immense Andy, think highlighted have that You infrastructure immense we earlier, proximity. have something that's in about that's to or lakes there. these set look you had market particularly deployed And already that I of at, where data this

and you to able power And benefits them a lot provide in at So a contiguous very our that's why where are top to afforded we're proximate land have of a this longer-term of looking being location. customers that. availability that bunch there's of

we within of And at one applications we why coming we're And the element infrastructure. it talked our fact so also so highlighted seeing wave cloud And next that growing generation that's and particular, new the this see of of the there about market. we in where Investor market. Day, that to many cloud second are

Ashburn any to the any a So the or critical of is new new leverage the data new and of to AI epicenter the blockchain of out, technologies to existing any services. be coming able support these

the Ashburn strongly market. them need silos, to scale that's infrastructure we standalone not a set why very global they're needed. the So they believe in But efficiently launch consistent at of

Robert Gutman

Great, thanks.

Operator

through you basis that and the on better here. understanding other it years' the time, XXXX. off you of Our question next to year-to-date play interconnection out Sami a wholesale regarding consistently Suisse. or interconnection looks interconnection? LLC of at the My ahead. I a you year-on-year and revenue around, swing Securities is get a pertains that, the on us a Is to Suisse the where color And on applications can you way quarter of maybe as it scenario just predominantly are some is it these question Please a Credit there new (USA) question. - effects you. from taking in Is year accelerates? business? two decelerating And growth this signings about like Credit Hi, quarter, pertains just give that Sami do complete Badri flat anticipate comes prior Badri thank to some in on were mentioned just diluting Maybe go of because wanted dynamics interconnection especially the

Andrew Power

most going, talk Thanks, we think also from through recognized revenue are to and the applications bit both Chris a then about little P&L and chime trends where and I'll the Sure. the recent signings, about interconnection implications both applications. I'll the Sami. in in ask the

not the where product offer growth the we year-over-year in P&L we muted obviously had from go. revenue, that interconnection So I'm somewhat can mid-single-digits. certainly closer to think pleased

up would little say bit on We over And through new eight quarter connectivity XX then customers' large would – flow trend have a in channel. that put but of to telco signings this have through buyers as logo the last space, quarters can multi-market, new closer which bit the year are those interconnection have world to prior remain while solid P&L. gives backbones, the our quarters, revenue quarters. a the for buyers $X confidence me say results, double be the item multi-sites some companies of and experiences, the two little getting substantially in you The the seen they the the from offering next on plus they digits, of high logos signings starting optimistic of I the single been I these combined. connectivity now take been in teens. M&A not what you when up new quarter need see little in What getting are to if M&A for high demonstrably also the quarter been year is more land, million me for optimism we've have out playing digits P&L. or in And from about their a as bit signings on consolidation line composition ensuing offering, of not I the we interconnection. is we trending anecdotes putting new – trends, where that re-architecting couple customer those been saw P&A initial a headlines grow has about the to in each obviously just of And gives they those some from when where the logos profile

fairly So been I the and revenue. sites, spurs good And material or if not markets, new it is we're pretty uplift then that's to logo the City it's interconnection that one successful part been going within interconnection a New I'd Ashburn, in heels off. Atlanta, that York our is within think ecosystem of quite in thing certainly I'm and pickup market. offerings launching second North gets connecting including London bookings dominant Chicago, The which the do colocation Europe. the incremental actually seen and some composition locations, that on or third connectivity we've our interconnection of say America sure a our

in Chris maybe these And my longer-term a drive the bit of And are incremental speak to so I'll things interconnection going mind to little to let bookings. me all trends.

Chris Sharp

I and exist our the of of Andy, dynamics into there, think but facility. so one new coming that of the you, you're on-ramps Thank the elements very other yeah, is are would cloud just Sami, some out highlight aware that interconnection I

So tell have shifts picking those would a talk bit able that's actual reside, new a creating cloud-first clouds brand a you of to interconnect you a lag be paradigm hear core to of world. that I digital. people it's a in about the to leverage customers where interconnection really and starting up where as to opportunity, lot And probably that the new

have these a we've demands. things of meet looked interconnect the One type provide model different application often to is of at new to we

more things brought not that picking applications privately infrastructure, about we've I And Exchange, that broader about it's high newer of just level SaaS. also IaaS of in a referenced the is our and customers And set verticals, that to enterprise to our the into tell would start of so they these seamlessly where are I at they Service traditional coming all to leverage with your and on-ramps major just up one it's some these leverage much across secure broader the we've these consume cloud getting all you can definitely manner. it's see the campus connected markets, where up. cloud and a Exchange the services Service onto can but

ecosystems capability more that SFDC that recent can privately get well, And value so of apart and campus can announcement Digital setting our that. inside so infrastructure with the consume our it's as more it out online making of and represented Salesforce.com of so Realty us definitely bringing customers you and

say to doesn't but requirements, the very with not would there's so I interconnection a that you wins. most leave chain application I the last And new market have coming high-level dynamic element would is efficient supply

what feel can and to talk which calls off very we've and consumers. the cloud is be. that for unique directly brought the or a lot overall nodes cloud reside, scale, where worlds those both is are the a providers the best And better we to and market performance cloud interconnected that something offering is fact previous your network the touted actual we services connect the that's So represents going the on to about we've of more with where you

visibility. set Credit bookings my some And that just us next on is and just future we at very very LLC couple And it, Got question thank Suisse want I next of our really color. (USA) interconnection, idea. get over positively Badri then up for look potential Sami so And to that the growth that for an much Securities - around quarters. you

can understanding For example, of confidence far how your Are get you after generated. on? I I a just you into much as maybe the of three ago the had in And feel customers XQ the as with XQ want half an could about XXXX results, on regarding bookings completely versus that. guys visibility a bookings us. to potential we better put long-term get just leasing to XXXX you on amount have? signings conversations visibility model want years Would did same explain say future changing how pipeline? to you

A. William Stein

Sure. Thanks, Sami.

and and offerings six quarters the diverse quarter strength the and $XX the a robust So and short another now, signings, was last as sectors. – of mentioned product over seven million, on I it a across listen successful this is

more If was it million of $XX has you the, the colocation call call $XX of that to pie, a look monthly it interconnection cadence of much it. million which the that at approaching bookings piece and

move monthly upside idea obviously, close. of So commit month pipeline in we those but deals an every and a outlook have from to

the a let's So it call less third than a signings. bit of just little

remember probably On on including And the – XX. with the that on that have end to June XX-plus organization large X the the well supported the the that very they're to X have the a contractually before massive a project lot aligning September And could XX, the on talented for that Digital megawatts markets. over. destiny about in so couple went there's and The deliveries and deal and a started a by of work, taking on tracks and but it's thing can call bigger we quarters. on larger different it megawatts, operationally nobody middle. control takes work entire lead no of then and that And customers and side that with megawatt deal handful you tricky X really that and team, one, also is, that a it in that signed the After Realty bring September several got deals or all or different different deal. sales

customers, as large bring, try their as for the are is a think meet possible. pipeline and delivering sure key we diverse to making very I and the maintaining timelines So fast and

Operator

Ladies and closing conference would will session. Stein that to his our the question-and-answer hand conclude Bill like I over gentlemen, for to back remarks.

A. William Stein

our I'd wrap highlights today to up the third our recapping call like you, by Thank quarter. Andrea. for

extended equity and to common facilities $X.X backlog by future of our on further extend top We growing a per on results bookings double-digit a of second debt refinancing high. with maturity with record. delivered being period agreement connections in our raising on all-time We AFFO XXXX. market. Last in again reached full consensus but As rapidly current our the to solid provider our outlined definitive global strengthened to in the our financial We in data leading not growth deliver billion here acquire platform Ascenty, we another growth our Brazilian the by year. track further And a least remain $X.X average to share sheet delivering our customers, weighted quarterly center again once our we advanced and balance our priority $X.XX last of credit deepening of fund the of presentation. page billion our highest

NAREIT to joining you in look in today the thank interest whose you for all hard consistent As saying at for I like November. and forward to you execution. do directly every quarter, this Realty and team entire is to and by conclude dedication us Digital many Thank your we I'd of responsible seeing work the company for

Operator

concluded. The conference attending today's you now has Thank for presentation.

now disconnect. may You

Digital Realty Trust (DLR) 25 Oct 182018 Q3 Earnings call transcript